ACCA-F5-Performance Management-Detailed Live class Recorded

Description

The aim of the Performance Management is to develop knowledge and particularly skills in the application of Management Accounting techniques to quantitative and qualitative information for planning, decision making, performance evaluation, and control.

Syllabus area A

The syllabus begins by focusing on the information needs, technologies and systems required by organisations to manage and measure performance in the modern, competitive environment. It is vital for an accountant to understand how information systems and developments in technology influence the management accounting techniques employed and how vital information systems are in the mechanisms of managing and controlling an organisation.

Syllabus area B
The syllabus then moves on to introducing more specialised management accounting topics. There is some knowledge assumed from MA, primarily overhead treatments using absorption and marginal costing. The objective here is to ensure students have a broader background in management accounting techniques. Again, the emphasis is on the implications of the calculations, not just the calculations themselves.

Syllabus area C
The syllabus then considers decision making. Students need to appreciate the problems surrounding scarce resources, pricing, and make-or-buy decisions, and how these problems relate to the assessment of performance. Risk and uncertainty are a factor of real-life decision making; students need to understand risk and must be able to apply some basic methods to help resolve the risks inherent in decision making.

Students should never forget that management accounting provides information partly so that decisions can be made. This area of the syllabus is important and will be a rich source of future questions.

Syllabus area D
Budgeting is an important aspect of many accountants’ lives. The syllabus explores different budgeting techniques and the problems inherent in them. The behavioural aspects of budgeting are important for accountants to understand, and the syllabus includes consideration of the way individuals might react to a budget. Abuse of the budgeting environment is common and damages businesses more than is often realised. Candidates need to appreciate the problems inherent in budgeting and must be able to suggest how these problems can be overcome.

Standard costing and variances are included in syllabus area D. All of the variances previously examined in MA are assumed knowledge here and, while these basic variances would not be expected to be the basis of a complete question in Section B or C, their inclusion in either part of a Section B or C question or as a Section A question would be reasonable.

Syllabus area E
The syllabus concludes with performance measurement and control. This is the core of the syllabus. Accountants need to understand how a business should be managed and controlled. They should appreciate the importance of both financial and non-financial performance measures in management. Hence, the syllabus explicitly states that candidates may be required to ‘analyse past performance and suggest ways for improving financial and non-financial performance’, although this skill was assumed previously in PM anyway.

The requirements of syllabus area E reflect that accountants should also appreciate the difficulty of assessing performance in a divisionalised business, and the problems caused by failing to consider external influences on performance. This section therefore leads very directly to Advanced Performance Management.

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